Stanbic’s
Q4 2017 results which were released this afternoon show that PBT of N15.5bn
grew by 35% y/y while PAT came in at N14.2bn, up 25% y/y. Both revenue lines
were up, but the non-interest income result was the more striking of the two,
increasing by a stellar 63% y/y to N24.9bn.

Funding
income managed a 10% y/y growth to N20.6bn. Loan loss provisions also
increased, by 16% y/y, but this increase was surpassed by that of revenue growth.
A higher tax rate (31% vs 27.4% a year ago) explain the slower growth in PAT
relative to PBT. Q/q movements were modest across the P&L, except for the
other comprehensive income (OCI) line where the N4.1bn reported compare with
N323m in Q3. Compared with our estimates, while the PBT missed by 22%, PAT was
in line thanks to the OCI result. The results were broadly in line with
consensus.

Stanbic
proposed a final dividend of 50kobo. Consensus and FBNQuest Capital expected at
least N1 naira. The market does not have a good handle on dividend expectations
because the payout ratio over the last few years have seen significant
fluctuations. Even if the proposed dividend had matched expectations, the low
single digit yield would have had no impact on the stock in our view.

There
are no major positives or negatives in the underlying results. As such, we
would expect a neutral reaction by the market. Focus therefore shifts to the
2018 guidance when the bank hosts its conference call on Monday. Offsetting
reduced interest income from tbills and bonds with a pick-up in loan growth
will be important for banks in general. Stanbic’s business still being skewed
to non-interest income provides some buffer at least, however.